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Nicholas Financial Reports Record 3rd Quarter Revenue And Earnings

CLEARWATER, Fla., Jan. 27, 2011 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (Nasdaq:NICK) announced that for the three months ended December 31, 2010 net earnings increased 54% to $4,475,000 as compared to $2,909,000 for the three months ended December 31, 2009. Per share diluted net earnings increased 52% to $0.38 as compared to $0.25 for the three months ended December 31, 2009. Revenue increased 11% to $15,995,000 for the three months ended December 31, 2010 as compared to $14,365,000 for the three months ended December 31, 2009.

For the nine months ended December 31, 2010, net earnings increased 58% to $12,033,000 as compared to $7,605,000 for the nine months ended December 31, 2009. Per share diluted net earnings increased 55% to $1.01 as compared to $0.65 for the nine months ended December 31, 2009. Revenue increased 11% to $46,679,000 for the nine months ended December 31, 2010 as compared to $42,216,000 for the nine months ended December 31, 2009.

According to Peter L. Vosotas, Chairman and CEO, "We are pleased to report record 3rd quarter revenue and earnings. Our results were favorably impacted by an increase in revenues and a reduction in the net charge-off rate. In the third quarter the Company entered the Illinois and Missouri markets, where we have signed leases for new branch locations in Chicago and St. Louis. We expect these new locations to be fully operational by the end of the fourth quarter. The Company will then operate in fourteen states with a total of 56 branch locations.

Nicholas Financial, Inc. is one of the largest publicly traded specialty consumer finance companies based in the Southeastern states. The Company presently operates 54 branch locations in both the Southeastern and the Midwestern states. The Company has approximately 11,800,000 shares of common stock outstanding. For an index of Nicholas Financial, Inc.'s news releases or to obtain a specific release, visit our web site at
www.nicholasfinancial.com .

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that involve risks and uncertainties including general economic conditions, access to bank financing, and other risks detailed from time to time in the Company's filings and reports with the Securities and Exchange Commission including the Company's Annual Report on Form 10-K for the year ended March 31, 2010. Such statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially. All forward looking statements and cautionary statements included in this document are made as of the date hereby based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward looking statement or cautionary statement.

Nicholas Financial, Inc.

Condensed Consolidated Statements of Income

(Unaudited, Dollars in Thousands, Except Share and Per Share Amounts)

Three months ended December 31,

Nine months endedDecember 31,

2010

2009

2010

2009

Revenue:

Interest and fee income on finance receivables

$15,985

$14,354

$46,650

$42,166

Sales

10

11

29

50

15,995

14,365

46,679

42,216

Expenses:

Operating

6,244

5,788

18,735

17,424

Provision for credit losses

1,201

3,020

4,509

9,597

Interest expense

1,383

1,079

4,372

3,645

Change in fair value of interest rate swaps

(96)

(265)

(478)

(797)

8,732

9,622

27,138

29,869

Operating income before income taxes

7,263

4,743

19,541

12,347

Income tax expense

2,788

1,834

7,508

4,742

Net income

$ 4,475

$ 2,909

$12,033

$ 7,605

Earnings per share:

Basic

$ 0.39

$ 0.25

$ 1.04

$ 0.67

Diluted

$ 0.38

$ 0.25

$ 1.01

$ 0.65

Weighted average shares

11,604,000

11,510,000

11,606,000

11,400,000

Weighted average shares and assumed dilution

11,900,000

11,725,000

11,867,000

11,617,000

Condensed Consolidated Balance Sheets

(Unaudited, In Thousands)

December 31,

March 31,

2010

2010

Cash

$ 3,352

$ 1,534

Finance receivables, net

222,309

202,440

Other assets

11,066

10,162

Total assets

$ 236,727

$ 214,136

Line of credit

$ 118,017

$ 107,275

Other liabilities

8,511

9,424

Total liabilities

126,528

116,699

Shareholders' equity

110,199

97,437

Total liabilities and shareholders' equity

$ 236,727

$ 214,136

Three months ended December 31,

Nine months ended December 31,

Portfolio Summary

2010

2009

2010

2009

Average finance receivables, net of unearned interest (1)

$255,571,347

$226,321,020

$247,650,478

$221,581,423

Average indebtedness (2)

$117,009,444

$110,060,915

$112,860,116

$106,465,014

Interest and fee income on finance receivables (3)

$ 15,984,880

$ 14,354,022

$ 46,649,661

$ 42,166,002

Interest expense

1,382,950

1,079,044

4,372,080

3,645,282

Net interest and fee income on finance receivables

$ 14,601,930

$ 13,274,978

$ 42,277,581

$ 38,520,720

Weighted average contractual rate (4)

23.48%

23.41%

23.45%

23.60%

Average cost of borrowed funds (2)

4.73%

3.92%

5.17%

4.57%

Gross portfolio yield (5)

25.02%

25.37%

25.12%

25.37%

Interest expense as a percentage of average finance receivables, net of unearned interest

2.16%

1.91%

2.35%

2.19%

Provision for credit losses as a percentage of average finance receivables, net of unearned interest

1.88%

5.34%

2.43%

5.77%

Net portfolio yield (5)

20.98%

18.12%

20.34%

17.41%

Marketing, salaries, employee benefits, depreciation and administrative expenses as a percentage of average finance receivables, net of unearned interest (6)

9.69%

10.12%

9.99%

10.38%

Pre-tax yield as a percentage of average finance receivables, net of unearned interest (7)

11.29%

8.00%

10.35%

7.03%

Write-off to liquidation (8)

7.20%

11.27%

6.97%

11.07%

Net charge-off percentage (9)

5.39%

8.39%

5.11%

8.12%

Note: All three and nine month key performance indicators expressed as percentages have been annualized.

(1) Average finance receivables, net of unearned interest, represents the average of gross finance receivables, less unearned interest throughout the period.

(2) Average indebtedness represents the average outstanding borrowings under the Line. Average cost of borrowed funds represents interest expense as a percentage of average indebtedness.

(3) Interest and fee income on finance receivables does not include revenue generated by Nicholas Data Services, Inc., ("NDS") the wholly-owned software subsidiary of Nicholas Financial, Inc.

(4) Weighted average contractual rate represents the weighted average annual percentage rate (APR) of all Contracts purchased and direct loans originated during the period.

(5) Gross portfolio yield represents interest and fee income on finance receivables as a percentage of average finance receivables, net of unearned interest. Net portfolio yield represents interest and fee income on finance receivables minus (a) interest expense and (b) the provision for credit losses as a percentage of average finance receivables, net of unearned interest.

(6) Administrative expenses included in the calculation above are net of administrative expenses associated with NDS which approximated $55,000 for both the three-month periods ended December 31, 2010 and 2009 and $173,000 and $164,000 during the nine-month periods ended December 31, 2010 and 2009, respectively.

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